Asbestos Bill Hearing Set as John Crane Files RICO Suits

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By Steven M. Sellers and Peter Hayes

Feb. 1 — The Senate Judiciary Committee is set to consider an asbestos bankruptcy trust overhaul bill Wednesday aimed at what its business proponents say is abusive litigation tactics by plaintiffs' attorneys.

Meanwhile, in what some overhaul advocates point to as more examples of the problems they seek to redress, John Crane Co. Inc. has filed new complaints accusing two plaintiffs' law firms of filing fraudulent asbestos exposure claims.

Mark Behrens, a product liability defense attorney with Shook, Hardy & Bacon in Washington, D.C., told Bloomberg BNA Jan. 27 the FACT Act (H.R. 1927) would address some of the issues raised in the complaints.

One of those issues is that plaintiffs' lawyers are waiting to file asbestos trust claims involving bankrupt companies so that it will appear, in their tort suits, that only solvent companies are responsible for asbestos-related injuries.

“The FACT Act would bring about greater transparency with respect to allegations made in asbestos bankruptcy trust claims, promoting honesty with respect to claims made against trusts and against solvent defendants in the tort system,” said Behrens.

While the legislation is unlikely to pass in the Senate, the bill and the suits reflect the high stakes at issue over a product banned a quarter century ago and the huge pool of potential plaintiffs.

For their part, lawyers for the plaintiffs' law firms dispute the claims by John Crane, a company that has faced many suits over the toxic substance. They also tell Bloomberg BNA the claims reflect a broader effort to weaken legitimate litigation brought against asbestos defendants.

Attorney Michael Magner, of Jones Walker in New Orleans, who represents Dallas-based Simon Greenstone Panatier Bartlett, told Bloomberg BNA Jan. 26 the claims are “nothing more than retaliation by a company that consistently loses its cases against Simon Greenstone.”

“Accusing the attorneys at Simon Greenstone of engaging in wrongdoing is a cynical effort by John Crane to drive Simon Greenstone out of the courtroom and convince other trial lawyers to pull their punches when litigating against John Crane,” Magner said.

Daniel Brier, of Myers, Brier & Kelly in Scranton, Pa., who represents Philadelphia's Shein Law Center and its partners, defended the firm's representation of its asbestos clients, and questioned the suits.

“This is part of a coordinated desperate strategy to attack lawyers that represent American workers and service members grievously and fatally harmed by asbestos products,” Brier told Bloomberg BNA Jan. 27 in an e-mail.

“Ben Shein's clients received financial compensation from John Crane, Inc. many years ago after verdicts were entered following trials before juries and judges,” Brier said, adding that John Crane paid the verdicts “presumably after concluding that there was no factual or legal basis to appeal the verdicts.”

RICO Violations Alleged

John Crane's complaints, filed as part of motions to intervene in litigation in the U.S. District Court for the Western District of North Carolina, claim the two law firms violated the federal Racketeer Influenced and Corrupt Organizations Act .

The company also claims the firms violated federal mail, wire fraud, obstruction of justice and witness tampering laws.

The complaints cite examples of allegedly false claims, undisclosed asbestos exposure trust fund claims and other alleged abuses.

The motions to intervene were brought in similar litigation filed by Garlock Sealing Technologies LLC against plaintiff law firms pending in the Western District of North Carolina.

Those complaints followed a 2014 finding by a bankruptcy court in North Carolina that some asbestos claims in the Garlock litigation contained “demonstrable misrepresentation” .

That finding prompted Garlock to file complaints against plaintiffs' law firms under RICO alleging racketeering, fraud and conspiracy claims. John Crane contends its suits present issues common to other cases filed in Garlock.

The court hasn't yet ruled on John Crane's motions to intervene.

Senate Asbestos Bill Hearing Looms

The recently-filed RICO allegations may strike a legislative chord.

The Senate Judiciary Committee has scheduled a Feb. 3 hearing on the Furthering Asbestos Claims Transparency Act—a bill that would address some of the abuses alleged in John Crane's complaints.

The FACT Act would amend Section 524(g) of the Bankruptcy Code to require each asbestos bankruptcy trust to file a report with the bankruptcy court every quarter that “describes each demand the trust received from, including the name and exposure history of, a claimant and the basis for any payment from the trust made to such claimant.”

John Crane contends, in part, that the law firms wrongly delayed filing of asbestos trust claims until after the completion of tort litigation to create the false appearance that the plaintiffs “had only been exposed to asbestos-containing products for which non-bankrupt companies were responsible.”

While advocates of the legislation have conceded it is unlikely to become law, they say hearings are an opportunity to publicize what they say is suppression of evidence by the plaintiffs' bar (.

Greater Transparency Needed?

“Suppression of evidence of exposures to bankrupt products, such as that found by the Judge in Garlock and alleged in the John Crane complaints, would be less likely to occur if the FACT Act becomes law,” Behrens, of Shook, Hardy & Bacon, said.

“Plaintiffs and their lawyers would be on notice that any inconsistencies with respect to claims made in the trust system and in the tort system would eventually come to light.”

But Michael Green, a professor at Wake Forest University Law School who focuses on toxic torts and complex litigation, told Bloomberg BNA Jan. 27 asbestos trust reforms may not be necessary if its aim is to cure systemic abuses.

“I looked into the bill (or one similar) about 18 months ago and I concluded that the evidence to demonstrate sufficiently widespread abuses just wasn't there, although there were individual cases of fraud revealed,” Green said in an e-mail.

Green declined to comment on the recent John Crane complaints, saying he wasn't familiar with them.

The American Association for Justice criticized the bill as harmful to plaintiffs.

“The companies responsible for exposing people to asbestos have been trying for years to delay and deny compensation to the people they harmed. They have pressed Congress to step in on their behalf. It’s notable that 16 House Republicans voted against the bill there, and no Democrats voted for it,” Julia Duncan, director of federal programs at AAJ told Bloomberg BNA Feb. 1.

“This bill would harm individuals and families suffering from asbestos disease, and it’s no wonder a host of public health groups and 16 veterans service organizations have spoken against it,” she said.

Similar legislation passed the House Jan. 8.

The law offices of McGuireWoods represents John Crane, Inc. in the motions to intervene.

Jones, Walker as well as Higgins & Owens represents Simon Greenstone Panatier Bartlett, as well as Jeffrey B. Simon, David C. Greenstone and Jennifer L. Bartlett.

Myers, Brier & Kelly, as well as Higgins & Owens represents Shein Law Center, Ltd., Benjamin P. Shein and Bethann Schaffzin Kagan.

To contact the reporter on this story: Steven M. Sellers in Washington at ssellers@bna.com and Peter Hayes at phayes@bna.com.

To contact the editor responsible for this story: Steven V. Patrick at spatrick@bna.com.